2019

Fabrication

Shipyard

Services

Eliminations

Total

Contract Type

Fixed-price and unit-rate ⁽¹⁾

$

70,052

$

152,590

$

30,147

$

(5,169

)

$

247,620

T&M ⁽²⁾

—

6,627

41,014

—

47,641

Other

—

—

10,545

(2,498

)

8,047

Total

$

70,052

$

159,217

$

81,706

$

(7,667

)

$

303,308

Segment

Performance

Obligations

Fabrication

$

50,145

Shipyard ⁽¹⁾

352,081

Services

13,212

Total

$

415,438

December 31,

2019

2018

Costs incurred on uncompleted contracts

$

386,932

$

256,239

Estimated loss incurred to date

(48,895

)

(35,470

)

Sub-total

338,037

220,769

Billings to date

(295,136

)

(190,588

)

Deferred revenue ⁽¹⁾

(4,592

)

(4,592

)

Total

$

38,309

$

25,589

Customer

2019

2018

2017

A

$

52,310

*

*

B

39,897

*

*

C

36,175

49,123

21,781

D

34,448

*

*

E

*

25,873

*

F

*

23,279

*

G

*

*

44,724

•

Harbor Tug Projects: Increased forecast costs and forecast liquidated damages of $4.9 million for our harbor tug projects within our Shipyard Division, primarily associated with increased craft labor and subcontracted services costs and extensions of schedule.  The impacts were primarily due to limitations in craft labor availability and the required use of contract labor in lieu of direct hire labor, the need to supplement and re-perform work for an under-performing paint subcontractor, higher than anticipated costs for paint scopes that were assumed by us from our paint subcontractor, higher cost estimates from our electrical and instrumentation subcontractor, our inability to achieve previously anticipated labor productivity improvements, and expectations of future labor productivity. The revised forecasts incorporate actual results realized from completion of the sixth vessel in the fourth quarter 2019 and progress achieved on the seventh vessel which was completed in February 2020. At December 31, 2019, the uncompleted vessels were at various stages of completion ranging from approximately 60% to 93% and are forecast to be completed at various dates ranging from the first quarter 2020 through the third quarter 2020. The projects were in a loss position at December 31, 2019 and our reserve for estimated losses was $1.6 million. If future craft labor productivity differs from our current estimates, we are unable to achieve our progress estimates, our schedules are further extended or the projects incur additional schedule liquidated damages, the projects would experience further losses.

•

Ice-Breaker Tug Project: Increased forecast costs of $1.5 million for our ice-breaker tug project within our Shipyard Division, primarily associated with increased craft labor and subcontracted services costs and extensions of schedule. The impacts were primarily due to incomplete and deficient subcontracted production engineering which resulted in construction rework and disruption and lower than anticipated craft labor productivity, higher cost estimates from our various subcontractors, difficulties encountered to launch the vessel, and anticipated higher costs to deliver the vessel.  At December 31, 2019, the vessel was approximately 91% complete and is forecast to be completed in the first quarter 2020 and delivered in the second quarter 2020. The project was in a loss position at December 31, 2019 and our reserve for estimated losses was $0.1 million. If future craft labor productivity and subcontractor costs differ from our current estimates, we are unable to achieve our progress estimates, our schedule is further extended, or we experience further delays or additional costs to deliver the vessel, the project would experience further losses.

•

Research Vessel Projects: Reversal of $0.8 million of gross profit recognized prior to 2019 for our three research vessel projects within our Shipyard Division. The projects have experienced difficulties with subcontracted production engineering, due in part to vessel size constraints and complexities associated with vessel functionality, which has resulted in incomplete and deficient production engineering and construction delays, disruption and rework. As a result, we made a collective decision with our customer to delay construction activities on the projects until production engineering achieves a satisfactory level of completion to limit further impacts on construction, including disruption and rework.  In addition, we have agreed to a change order with the customer that includes the following:

-

The replacement of the current subcontracted production engineering firm with a different engineering subcontractor that will be contracted directly by the customer;

-

Extensions of the schedule liquidated damages dates for the projects; and

-

Increases in project price for the contracts to account for the estimated cost impacts of the production engineering and construction delays.

•

Forty-Vehicle Ferry Projects: Increased forecast costs and forecast liquidated damages of $5.1 million for our two, forty-vehicle ferry projects within our Fabrication Division, primarily associated with increased craft labor, subcontracted services and materials costs.  The impacts were primarily due to greater than anticipated rework, lower than anticipated productivity experienced primarily during the fourth quarter 2019, and our expectations of future labor productivity.  The revised forecasts incorporate actual results realized to date on the first vehicle ferry and actual results realized on similar projects in backlog. At December 31, 2019, the projects were approximately 28% and 53% complete and are forecast to be completed in the fourth quarter 2020.  The projects were in a loss position at December 31, 2019 and our reserve for estimated losses was $3.0 million. If future craft labor productivity and subcontractor costs differ from our current estimates, we are unable to achieve our progress estimates, our schedules are further extended or the projects incur additional schedule liquidated damages, the projects would experience further losses.

•

Paddle Wheel River Boat Project: Increased forecast costs of $1.3 million for our paddle wheel river boat project within our Fabrication Division, primarily associated with increased craft labor costs.  The impacts were primarily due to difficulties encountered in commissioning the vessel and the need to accelerate our schedule, including performing out of sequence work scopes, to enable subcontracted works scopes to commence and mitigate the schedule and cost impacts of delaying the subcontracted work scopes. At December 31, 2019, the project was approximately 88% complete and is forecast to be completed in the first quarter 2020.  The project was in a loss position at December 31, 2019 and our reserve for estimated losses was $0.2 million. If future craft labor productivity and subcontractor costs differ from our current estimates, we are unable to achieve our progress estimates, our schedule is extended or the project incurs schedule liquidated damages, the project would experience further losses.

•

Jacket and Deck Project: Increased forecast costs and forecast liquidated damages of $2.0 million for our jacket and deck project within our Fabrication Division, primarily associated with increased subcontracted services costs and extensions of schedule.  The impacts were primarily due to higher than anticipated cost estimates from our commissioning subcontractors and delays associated with customer related directives. We are disputing the scope of the commissioning responsibility with the customer and we believe the extensions of schedule and associated forecast liquidated damages are the result of the customer related directives. Accordingly, we are pursuing change orders from the customer to recover the increased forecast commissioning costs and to extend the schedule date for determination of liquidated damages.  However, the customer is disputing the change orders, and accordingly, our forecast at December 31, 2019 does not reflect potential future benefits, if any, from any favorable resolution of the change orders. At December 31, 2019, the project was approximately 46% complete and is forecast to be completed in the third quarter 2020.  The project was in a loss position at December 31, 2019 and our reserve for estimated losses was $1.1 million.  If future craft labor productivity and subcontractor costs differ from our current estimates, we are unable to achieve our progress estimates, our schedules are further extended or the project incurs additional schedule liquidated damages, the project would experience further losses.

•

Subsea Components Project: Increased forecast costs and liquidated damages of $1.6 million for our subsea components project within our Services Division, primarily associated with increased craft labor, subcontracted services and materials costs and extensions of schedule. The impacts were primarily due to stringent welding procedure requirements and customer specifications which resulted in additional materials, craft labor, and subcontracted services and support. At December 31, 2019, the project was approximately 86% complete and is forecast to be completed in the first quarter 2020. The project was in a loss position at December 31, 2019 and our reserve for estimated losses was $0.2 million. If we continue to experience difficulties with the procedure requirements and specifications for the project or the schedule is further extended, the project would experience further losses.

•

Petrochemical Modules Project: Increased forecast costs of $2.4 million for our petrochemical module project within our Fabrication Division, primarily associated with increased subcontracted services costs.  The impacts were primarily due to higher cost estimates from our insulation and other subcontractors.  The project was completed in 2018.  

•

Harbor Tug Projects: Increased forecast costs and liquidated damages of $6.7 million for our harbor tug projects within our Shipyard Division, primarily associated with craft labor costs and extensions of schedule.  The impacts were primarily due to lower than anticipated craft labor productivity related to pipe installation and testing.  The projects were in a loss position at December 31, 2019 and 2018.  See further discussion above for associated impacts for 2019.

•

MPSV Projects: Increased forecast costs and liquidated damages for our two multi-purpose service vessels (“MPSV”) within our Shipyard Division. The impacts were primarily due to complexities related to the installation of the power and communications systems and reductions in price of $11.2 million for liquidated damages (representing the maximum amount of liquidated damages under the contracts) which are in dispute.  The projects were in a loss position at December 31, 2019 and 2018.  We are currently in a dispute with the customer regarding the two MPSV projects.  As a result of our dispute and uncertainty with respect to the timing of resolution, all contract assets, accrued contract losses, and deferred revenue balances associated with the projects have been classified within other noncurrent assets, resulting in a net contract asset balance of $12.5 million for these projects within other noncurrent assets on our Balance Sheet at December 31, 2019 and 2018.  See Note 8 for further discussion of the dispute.